The Blinder–Oaxaca decomposition for linear regression models
Abstract. The counterfactual decomposition technique popularized by Blinder (1973,
Journal of Human Resources, 436–455) and Oaxaca (1973,
International Economic Review, 693–709) is widely used to study
mean outcome differences between groups. For example, the technique is often
used to analyze wage gaps by sex or race. This article summarizes the
technique and addresses several complications, such as the identification of
effects of categorical predictors in the detailed decomposition or the
estimation of standard errors. A new command called oaxaca is
introduced, and examples illustrating its usage are given.
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oaxaca, Blinder–Oaxaca decomposition, outcome differential, wage gap
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